| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Brennan Asset Management maintains a cautious stance on expensive markets while focusing on undervalued international opportunities with specific catalysts. The broader market trades at a CAPE of 41, the second most expensive in history, while AI excitement appears excessive. The manager continues finding better value internationally than domestically. Key holdings include Metro Bank, which is transforming into a commercial mortgage bank and will benefit from exiting the MREL regime, eliminating £63 million in annual interest costs. The bank trades at 75% of tangible book value with potential for 3x returns by 2028. PTSB's sales process continues with expected resolution by Q1 2026. Warner Brothers Discovery faces competing bids from Netflix and Paramount in an ongoing acquisition battle. DCC represents a focused energy distribution play following divestitures of non-core businesses. The manager increased positions in Metro Bank and CODI preferreds while participating in GLIBA's rights offering. Despite individual stock opportunities, the overall investment environment remains challenging with limited domestic appeal.
Focus on undervalued international opportunities with multiple catalysts while avoiding expensive domestic markets trading at historically high valuations.
Manager expects continued challenging market environment with expensive valuations and limited domestic opportunities. Focus remains on international value opportunities with multiple catalysts. Several holdings are in process of being monetized, and proceeds will be redeployed cautiously. The overall investing opportunity set is viewed as less appealing on a macro level.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | CODI, DCC.L, GLIBA, MTRO.L, NFLX, PTSB.IR, WBD | AI, Banking, energy, international, Media, special situations, value |
MTRO LN PTSB ID WBD CODI DCC LN |
Manager experimented with AI tools for presentation creation, finding initial promise but significant limitations in execution. The experience highlighted both benefits and constraints of current AI applications for routine work tasks. This reinforced skepticism about AI productivity promises and market valuations at 41x CAPE. Focus on Metro Bank's transformation into commercial and specialty mortgage bank, with MREL exit providing significant cost savings. PTSB sales process ongoing with potential strategic and private equity bidders. Both banks offer attractive risk-reward profiles despite challenging UK and Irish economic environments. DCC represents focused energy distribution opportunity following divestiture of non-core businesses. The propane distribution business offers stable, cost-plus pricing with customer captivity through tank ownership. Solar installation services provide growth opportunity in European commercial market. Warner Brothers Discovery sales process continues with Netflix bid competing against Paramount's hostile tender. The regulatory process will involve political considerations. GCI Communications rights offering completed with potential for future acquisitions as Liberty Media vehicle. Manager continues finding more attractive opportunities internationally than domestically. Portfolio holdings trade at low relative and absolute valuations despite broader market expensiveness. Focus on special situations with multiple catalysts for rerating. |
| Jul 20 2025 | 2025 Q2 | CHTR, CODI, MTRO LN, PTSB LN, TIGO | cash flow, dividends, risk management, stability, total return | - | The commentary emphasizes dividend-paying companies with consistent growth and financial strength. Management views dividends as a tangible component of total return and risk mitigation. The strategy favors stability over speculative growth. |
| May 1 2025 | 2025 Q1 | CODI, GTX, LBRDA, PTSB LN | - | - | |
| Jan 26 2025 | 2024 Q4 | ARCO, CABP LN, CHTR, CODI, LILAK, MEGACPO MM, PTSB LN, TIGO | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
BankingEuropean banking sector produced strong outperformance led by Bank of Ireland, Lloyds Banking Group, and CaixaBank. Sector returns supported by interest rate stabilization and yield curve steepening. The market is transitioning toward improving organic loan growth after fifteen years of stagnant credit activity. |
Regional Banks Money Center Banks European Banks | |
EnergyEnergy plays a critical role in AI infrastructure economics, with data centers becoming major electricity consumers. Rising power costs compress margins while grid constraints and regulatory scrutiny influence deployment timelines. The manager emphasizes that unlike software-driven growth, AI compute cannot be scaled independently of physical energy reality. |
Data Centers Grid Power Infrastructure Utilities | |
MediaWarner Bros Discovery was the top contributor as multiple parties submitted acquisition offers, with Netflix acquiring the Streaming and Studios business while Global Networks spins to shareholders. Paramount Skydance made a $30 per share offer for the entire company, creating a bidding war that unlocked shareholder value. |
Streaming M&A Content Entertainment Bidding | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q2 |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 18, 2026 | Fund Letters | Patrick Brennan | MTRO LN | Metro Bank Holdings plc | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, capital returns, MREL, restructuring, tangible book | Login |
| Jan 18, 2026 | Fund Letters | Patrick Brennan | PTSB ID | Permanent TSB Group Holdings plc | Financials | Diversified Banks | Bull | Euronext Stock Exchange | banking, Capital, Ireland, M&A, Optionality | Login |
| Jan 18, 2026 | Fund Letters | Patrick Brennan | WBD | Warner Bros Discovery Inc. | Communication Services | Movies & Entertainment | Bull | NASDAQ | arbitrage, M&A, media, Regulatory risk, Streaming | Login |
| Jan 18, 2026 | Fund Letters | Patrick Brennan | CODI | Compass Diversified Holdings | Financials | Conglomerates | Bull | New York Stock Exchange | balance sheet, conglomerate, deleveraging, Fraud Recovery, Preferreds | Login |
| Jan 18, 2026 | Fund Letters | Patrick Brennan | DCC LN | DCC plc | Energy | Energy Distribution | Bull | New York Stock Exchange | buybacks, Energy Distribution, Propane, Sum-of-parts, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| CODI | CODI reiterated that it believed the company was the victim of deliberate, systematic fraud by the founder of subsidiary firm Lugano and that this fraud bypassed reasonable internal controls. CODI suggested that recovery could be ~$140 million, including ~$70 million of tax refunds. CODI also noted that it would be judicious on capital spending and expressed an openness to sell multiple subsidiaries to accelerate the deleveraging process. Currently, the preferred securities trade at just under 80% of par value and yield ~10%. We estimate that there could be ~ $1 billion+ of equity sitting in front of the preferreds, providing substantial cushion. |
| DCC.L | DCC is a former conglomerate that is in the process of selling non-core businesses to focus on its core propane energy distribution business. DCC's core energy business has performed well historically, and the business has multiple organic and inorganic opportunities. The company has been using proceeds from the various divestitures to repurchase stock and could ultimately purchase ~25% of outstanding shares once the various sales are completed. DCC expects medium-term growth of 9%+. We estimate that the core energy business is trading for ~6.6x FY 2026 EBITDA, a discount to more leveraged peers. |
| GLIBA | 95 percent of GLIBA right holders exercised their basic rights, and therefore our overallocation was relatively modest. The rights offering increased our weighting to the name at a highly attractive price that allows considerable upside to GLIBA's Alaska cable properties alone. At Liberty Media's analyst day this past November, Dr. Malone sounded bullish on GLIBA and expressed confidence that this company could evolve into the next Liberty Media vehicle. GLIBA has likely identified a couple of targets, but it is a crapshoot on when any acquisition closes. |
| MTRO.L | Metro Bank reported continued progress on its transformation into a commercial and specialty mortgage focused bank, reiterated its annual/long-term guidance and noted that it expected to exit the MREL regime. £525 million of 12% senior bonds (~£63 million annualized interest cost) will soon be called and not replaced. MTRO's 2027 guidance calls for mid-to-high teen returns on tangible equity and this guidance looked achievable prior to the MREL exit. We believe the bank might be able to commence capital returns in the back half of this year. MTRO currently trades at ~75% of tangible book value. We think the bank could conceivably have earnings potential of ~0.40 per share by 2028 or ~3x current prices. |
| NFLX | NFLX was the portfolio's largest detractor in 4Q25 following investor concerns around near-term subscriber growth and rising content spending. While revenue grew approximately 10% year-over-year, management guided to slower net subscriber additions in North America and Europe after recent price increases, and margins were pressured by elevated investment in live sports and international content. |
| PTSB.IR | There has been lots of noise/speculation in the Irish press regarding PTSB's current sales process, but there is no substantive update. We continue to believe that Austrian bank BAWAG and/or a couple of private equity firms will submit bids and we are hopeful that another strategic bidder will emerge. There should be some update on the sales process and on the much-discussed risk weightings by the end of the first quarter, but it is possible that this will slip into the second quarter. |
| WBD | Warner Bros Discovery (WBD) was the top contributor during the quarter. The U.S.-headquartered media company's stock price surged as multiple parties submitted offers to acquire all or part of the business. Following several rounds of bidding, WBD announced an agreement to sell its Streaming and Studios business to Netflix, while spinning the Global Networks business to shareholders. Paramount Skydance subsequently made a direct $30 per share offer to shareholders for the entire company. We are pleased with the steps the WBD board has taken thus far to unlock shareholder value. We will continue to closely monitor developments as this bidding war unfolds. |
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